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Today's Technical Outlook -8/26/2013

Market Summary

David Chojnacki S1F Market Technician

The indices opened slightly to the upside on Friday, before being hit with a Housing Starts report that was well below expectations. However, the Market eventually reacted to the report positively, thinking that this will prolong the Fed's 'Green Crack'. By the final bell on Friday, the major indices had finished to the upside. At the close, the DJIA was up 46.7 points, the S&P added 6.5 points, and the Nasdaq100 moved up 0.72%. Breadth was positive, 2.3 to 1, on above average volume. For the week, the DJIA was down 0.4%, the S&P added 0.4%, and the Nasdaq100 moving up 1.6%. RSI's moved up in the session, with the DJIA moving off the over-sold condition. The Nasdaq100 is now only 19 points from its recent high(3143). The top of a 3 year channel is at 3150, which should present formidable resistance. It also closed above its 20D-SMA((3107). The DJIA has been the weakest of the major indices and its 50D-SMA is now down-sloping. The VIX lost 5.2% to close at 13.98.

Trading Trends

David Chojnacki S1F Market Technician

Long term technicals continue to remain positive, with the Nasdaq100 within 19 points of the early August high. The DJIA is down 4.1% from its recent high. A tale of two markets. Short term technicals, which have been weakening, saw a bit of a bounce last week, with the Nasdaq100 moving above its 20D-SMA and the S&P crossing just above its 50D-SMA. We continue to watch the 1675 level in the S&P. Below 1675 and short term bias is to the downside. Near term, last week's bounce has near term bias slightly to the upside. We expect trading to remain relatively flat this week going into the long holiday weekend. Overseas markets are slightly lower in early trade. Futures are a bit lower versus fair value.

MAJOR INDICES Short term support and resistance level

DJIA

close 15010

SP500

close 1663

N100

close 3124

15000

15125

1662

1675

3112

3125

14900

15250

1659

1680

3107

3137

14864

15263

1650

1688

3100

3143

14850

15325

1637

1700

3088

3150

14700

15332

1625

1710

3075

3162

14659

15450

1612

1712

3062

3175

14500

15500

1600

1725

3050

3188

 

15550

1588

1737

3037

3200

   

1575

 

3033

3212

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TODAY'S DATE, UNLESS OTHERWISE INDICATED

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Relative to traditional ETFs, leveraged, inverse and leveraged inverse ETFs typically have higher costs and lower tax efficiency. 3) The effects of compounding can lead to significant deviations from traditional benchmarks over longer time periods. For example, if $100,000 is invested in an index that increases in value by 10% on day one and then decreases in value by 10% on day two, the investment will be worth $110,000 at the end of day one and $99,000 after day two. However, the value of a security that doubles the daily performance of the index would be worth $120,000 on day one and $96,000 after day two. Thus, the index is down 1% after two days, a doubling of which would be down 2%. However, the security attempting to double the return of the index is down 4%. Investors should consider carefully the potential impact over longer periods. MLP and MLP ETF Risks Individual MLPs are publicly traded partnerships that have unique risks related to their structure. These include, but are not limited to, their reliance on the capital markets to fund growth, adverse ruling on the current tax treatment of distributions (typically mostly tax deferred), and commodity volume risk.

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